Innovative Solutions and Current Trends in Agrarian Economy in the Digital Era: Chayanov on the Labor-consuming Balance of the Peasant Economy and Its Determining Factors

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AbstractThe purpose of the study is to reveal the essence and develop several provisions of the Chayanov theory of labor-consumption balance related to the mechanism of influence of main determinants on this balance. The methodology of neoclassical economic theory, particularly the functional method of analyzing limit values, was used to study the labor-consumption balance. Research results and scientific novelty: The authors analyze a number of peculiarities of the production expansion mechanism in the peasant economy, going beyond the equilibrium optimal production volume to satisfy the unsaturated consumer demands of the family, first, with increasing labor intensity (the degree of peasant labor self-exploitation), and second, with increasing labor productivity. The paper shows that in the first case, the point of labor-consumption equilibrium does not change. In contrast, the expansion of production beyond this equilibrium leads to the fact that the peasant economy continues to function even in the zone of economic disadvantage of production. The factors on which the degree of self-exploitation of labor depends are identified; also, the significance and consequences of such self-exploitation of peasant labor are analyzed. It is proved that in the second case, when production increases due to increased labor productivity, the volume of production increases, along with the degree of saturation of consumer demand of the family. In addition, marginal labor costs are reduced and become aligned with the marginal income, but it occurs at another point in the labor-consumption balance, with a shift to the right. More than that, the zone of production profitability in the peasant economy is expanding due to such a shift in the labor-consumption balance.KeywordsLabor-consumption balanceSelf-exploitation of laborMeasure of the hardness of workLabor peasant farmLabor incomeMarginal labor costsMarginal income